1982 (2) TMI 285 - HC - VAT and Sales Tax

Summary

Issues:
Interpretation of whether woollen pullovers and cardigans fall under the category of "hosiery" or "woollen goods" for taxation purposes under specific notifications.

Analysis:
The judgment pertains to a petition under article 226 of the Constitution regarding the classification of woollen pullovers and cardigans for taxation purposes. The petitioner, a business dealing in woollen garments, contested the assessing authority's classification of pullovers and cardigans as "woollen goods" instead of "hosiery," leading to a higher tax rate. The legislative history of relevant entries in the U.P. Sales Tax Act was examined to determine the correct classification. Various notifications from 1948 to 1971 were analyzed to understand the evolution of the classification of hosiery and woollen goods.

The term "hosiery" was scrutinized based on dictionary definitions and previous legal interpretations. The court considered the popular understanding of hosiery as undergarments or knitwear worn next to the skin. Previous decisions, such as Ram Lal & Brothers v. Commissioner of Sales Tax, were cited to establish that garments like cardigans and pullovers do not qualify as hosiery as they are not worn next to the skin but are considered as woollen goods in common parlance and business terminology.

The court rejected the argument to interpret "hosiery" in a broader sense to include all machine-knitted garments. It emphasized that for a garment to be classified as hosiery, it must satisfy specific criteria, including being worn next to the skin and being machine-knitted. Previous decisions, such as Commissioner of Sales Tax v. Verma Hosiery Stores, were referenced to support the distinction between hosiery and woollen goods based on these criteria.

Ultimately, the court concluded that pullovers and cardigans do not qualify as hosiery but fall under the category of woollen goods. The judgment highlighted the importance of considering the nature of the garment and its common understanding in determining its classification for taxation. Based on the legal analysis and precedents cited, the court dismissed the writ petition and upheld the classification of pullovers and cardigans as woollen goods, subject to a higher tax rate.